MF Global approved to settle claims of less than $50,000

MF Global Inc. won bankruptcy court approval of procedures that will help it sort through $22.7 billion worth of claims from 6,669 general creditors.

MF Global’s trustee, James Giddens, had asked the court to repay general creditor claims under certain procedures for settlements and objections. The motion gives him the authority to settle claims without court permission where the amount is less than $50,000.

“I think it’s clearly a sensible procedure,” said U.S. Bankruptcy Judge Martin Glenn, approving the request after hearing from lawyers that the settlement protocols would cover about 80 percent of the remaining claims.

MF Global filed the eight-largest bankruptcy on Oct. 31 after a $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations led to margin calls. Its bankruptcy filing listed assets of $41 billion and debt of $39.7 billion.

A trustee for parent company MF Global Holdings Ltd. has been unwinding the parent company under Chapter 11 of the U.S. Bankruptcy Code in an effort to repay creditors. A separate trustee for the failed brokerage, MF Global Inc., is liquidating assets to repay customers under the Securities Investor Protection Act to repay customers. Each trustee has conducted his own probe into how the company failed and they have been at odds over whether certain sums belong to creditors or customers.

Former Goldman Sachs Group Inc. Co-Chairman Jon Corzine, who ran MF Global until his Nov. 4 resignation, is the subject of class-action lawsuits along with other executives. An agreement between the trustees and customers provides for the sharing of information as well as any proceeds from lawsuit winnings.

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Bankruptcy court approval documents

Bloomberg News

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